Corporation Tax Act 2010 section 874

Charge to corporation tax

Section 874 imposes a corporation tax charge on income when a company obtains a capital sum connected with a leased asset, measured by reference to the payments for which relevant tax relief deductions have been allowed.

• When a company obtains a capital sum in connection with a leased asset, it is treated as receiving taxable income equal to the "chargeable amount" at the time the sum is obtained
• The chargeable amount is the total of the payments for which a deduction by way of relevant tax relief has been allowed, but it cannot exceed the capital sum itself
• To prevent double taxation, once a payment (or part of a payment) has been used to calculate the chargeable amount for one capital sum, it cannot be counted again when calculating the charge on any other capital sum
• Where multiple capital sums are involved, the anti-double-counting rule is applied in the chronological order in which the capital sums were obtained